We all know that more people are shopping online to limit exposure due to COVID-19 concerns and guidelines. In addition to consumers making the shift to online purchases, the financial industry has seen other interesting behavior shifts due to the pandemic. Visa predicts the crisis will drive a 100 billion dollar annual shift from credit card to debit cards1.

“‘There’s a consumer psyche of sort of not spending someone else’s money but spending my own money,’ said Oliver Jenkyn, Visa’s executive vice president for North America, at Baird’s Global Consumer, Tech & Services Conference” reported MarketWatch. 

Future Generations and Debit Cards

This prediction of a consumer shift to debit not only coincides with the current cardholder behavior due to the pandemic but also with Gen Z  general spending habits. When looking at pre-pandemic behavior 47% of Gen Zers used debit cards and just 11% use credit cards2. Why do the majority of GenZ cardholders prefer using debit cards? This next generation of cardholders tends to be more risk-averse when it comes to building debt. Similar to Jenkyn’s statement, they are not looking to spend someones else’s money which has resulted in a surge of debit usage.  

Debit cards in Card, not Present Transactions

According to the 2020 Debit Issuer Study commissioned by Discover Financial Services’ PULSE debit network, card-not-present payments spiked 21% in 2019, compared to 2018, reported CUTimes. Card-not-present could mean a card on file when shopping online or using a mobile wallet when shopping in a store. “Card-not-present transactions represent about 27% of all debit transactions and are growing about 10 times faster than card-present transactions,” said Tony Hayes, a partner at Oliver Wyman and study principal. As card not present transactions increase and consumer behavior adjusts to the current climate, debit is only expected to continue to grow and become an increasing portion of financial institutions’ income. 

How to Grow your Debit Portfolio

With CardUpdatr, we have helped financial institutions ensure their debit cards are Top of Wallet® on top sites like Amazon, Venmo, Apple, and Netflix. When a cardholder is considering switching cards, it is essential to have a tool to secure your card on file at those top sites. With a yearly 100 billion dollar opportunity, now is the time to focus on your debit portfolio and use CardUpdatr to certify your financial institution’s debit card as the default payment method.

 

To learn more about CardUpdatr and other Strivve solutions, please join us for a Live Demo on September 24th. For the invite and more details, contact lpatrick@strivve.com

1https://www.marketwatch.com/story/visa-says-covid-19-crisis-could-help-drive-100-billion-annual-shift-to-debit-cards-over-time-2020-06-03

2https://www.moneyunder30.com/money-stereotypes-about-generation-z#:~:text=Forty%2Dseven%20percent%20of%20Gen,amount%20of%20their%20daily%20transactions.

3https://www.cutimes.com/2020/08/11/new-debit-study-ushers-in-age-of-contactless-card-not-present-payments/?kw=New%20Debit%20Study%20Ushers%20in%20Age%20of%20Contactless%20%26%20Card-Not-Present%20Payments&utm_source=email&utm_medium=enl&utm_campaign=cuttingedge&utm_content=20200812&utm_term=cut